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Dex Media West, Inc.; Supermedia LLC; Yellow Pages Integrated Media Association v. City of Seattle; Ray Hoffman

October 15, 2012

DEX MEDIA WEST, INC.; SUPERMEDIA LLC; YELLOW PAGES INTEGRATED MEDIA ASSOCIATION, DBA YELLOW PAGES ASSOCIATION, PLAINTIFFS-APPELLANTS,
v.
CITY OF SEATTLE; RAY HOFFMAN, IN HIS OFFICIAL CAPACITY AS DIRECTOR OF SEATTLE PUBLIC UTILITIES, DEFENDANTS-APPELLEES. DEX MEDIA WEST, INC.; SUPERMEDIA LLC; YELLOW PAGES INTEGRATED MEDIA ASSOCIATION, DBA YELLOW PAGES ASSOCIATION, PLAINTIFFS-APPELLANTS,
v.
CITY OF SEATTLE; RAY HOFFMAN, IN HIS OFFICIAL CAPACITY AS DIRECTOR OF SEATTLE PUBLIC UTILITIES, DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Western District of Washington James L. Robart, District Judge, Presiding D.C. No.2:10-cv-01857-JLR

The opinion of the court was delivered by: Clifton, Circuit Judge:

FOR PUBLICATION

OPINION

D.C. No. 2:10-cv-01857-JLR

Argued and Submitted February 9, 2012-Pasadena, California

Before: Richard R. Clifton and N. Randy Smith, Circuit Judges, and Edward R. Korman, Senior District Judge.*fn1

Opinion by Judge Clifton

OPINION

The "yellow pages" telephone directory was once a ubiquitous part of American life, found in virtually every household and office. We were regularly encouraged to let our fingers do the walking. But times have changed, and today phone books, like land-line telephones themselves, are not so universally accepted.

The City of Seattle imposes substantial conditions and costs on the distribution of yellow pages phone directories. Ordi- nance 123427, adopted in 2010, requires publishers of yellow pages directories to obtain permits and pay a fee for each directory distributed in the city. It also establishes an opt-out registry, through which residents can decline to receive directories. The publishers are required by the Ordinance to advertise the availability of the opt-out registry on the front covers of their directories. The fees paid by the publishers are intended to cover the cost of operating and promoting the optout registry.

Plaintiffs Dex Media West, Inc., SuperMedia LLC, and the Yellow Pages Integrated Media Association (the "Yellow Pages Companies") challenged the validity of the Ordinance. The challenge is based primarily on the First Amendment of the United States Constitution, but the plaintiffs also present arguments based on the Commerce Clause of the Constitution and on the Washington State Constitution and statutes.

The district court rejected the plaintiffs' challenge and granted summary judgment in favor of the defendants, allowing the Ordinance to stand. The district court reasoned that the directories represented "commercial speech," which benefits from less protection under the First Amendment. The plaintiffs appeal.

We conclude that the yellow pages directories qualify for full protection under the First Amendment. Although portions of the directories are obviously commercial in nature, the books contain more than that, and we conclude that the directories are entitled to the full protection of the First Amendment. As a result, when we evaluate the Ordinance under strict scrutiny, it does not survive. Accordingly, we reverse the district court's entry of summary judgment in favor of the defendants and remand for the entry of judgment in favor of the plaintiffs.

I. Factual Background

A. Yellow Pages

The State of Washington requires telephone companies ("local exchange carriers" or "LECs") to publish and distribute residential listings, business listings, and certain consumer information for each customer in the local exchange. Wash. Admin. Code § 480-120-251. Local telephone companies often contract with publishers to satisfy this requirement by producing yellow pages directories.

The contents of phone books generally fall into three categories: (1) business "white pages" sections, which provide names, addresses, and phone numbers of local businesses and professionals in alphabetical order; (2) traditional yellow pages, which list businesses by category of product or service; and (3) public interest material, which includes community information, maps, and government listings. In large cities, the directories are sometimes divided into multiple volumes.

Paid advertising is mixed in with the listings. It typically constitutes less than half of the content in the yellow pages. For example, the 2010 Dex Seattle Metro business directory contained 1,344 pages. Of those, 96 were community pages, 404 were business "white pages," and 844 were business "yellow pages." Display advertising comprised about 35% of the 2010 Dex Seattle Metro yellow pages.

Users consult phone books for a number of reasons, including finding business, government, and personal telephone numbers and addresses, identifying businesses that provide a desired service or good, comparing goods and services available from multiple sellers, and learning about local telephone service and the community. Customers receive the directories free of charge.

The City estimates that yellow pages generate 1300 tons of waste each year, costing the municipality $190,000 annually.

B. Ordinance 123427

Between June and October 2010, the City Council heard testimony from residents who were frustrated with the delivery of unwanted yellow pages to their homes. Dex and Super-Media offered their own opt-out programs that they contended had low error rates, but numerous residents asserted that their requests to opt out through the private systems went unheeded. Those residents complained that the unwanted deliveries violated their right to privacy and generated large amounts of waste.

In response, in October 2010, the City enacted Ordinance 123427, which bans the distribution of "yellow pages phone books" in Seattle unless telephone book publishers meet certain conditions. Seattle Mun. Code § 6.255 (2010); see also Seattle Ordinance 123427 (Oct. 14, 2010) (Preamble) (describing the three purposes motivating the City to enact the Ordinance: waste reduction, protection of residents' privacy from unwanted intrusions, and recovery of costs incurred to maintain and enforce the opt-out registry).

The Ordinance created an "Opt-Out Registry . . . for residents and businesses to register and indicate their desire not to receive delivery of some or all yellow pages phone books." Seattle Mun. Code § 6.255.090(A). A publisher who fails to comply with any part of the Ordinance may be fined or lose its license. Id. §§ 6.255.130, .140.

Under the Ordinance, phone book publishers must "obtain[ ] an annual yellow pages phone book distributor license[,] . . . separate from and in addition to . . . the business license required pursuant to chapter 5.55." Id. § 6.255.030. To obtain the license, a publisher must pay a fee and provide information specified by the Director of Seattle Public Utilities. Id. §§ 6.255.060, .080(B). Publishers must also pay the City fourteen cents for "each yellow pages phone book distributed within the City." Id. § 6.255.100(A). Publishers must "prominently and conspicuously display on . . . the front cover of each yellow pages phone book distributed within the City" and "on their websites" a message mandated by the City about the City's program for opting out of receiving phone books. Id. § 6.255.110. ...


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